Hacking the recession: CrowdSource gets large series A to pimp on-demand skilled labor

With the economy rebounding slowly, consumers are starting to spend money again. Businesses are naturally looking to ramp up activity in parallel, but many are faced with the challenge of doing so with limited staff and resources. By turning to crowdsourcing, companies are able to complete a wide variety of labor-intensive tasks quickly and cheaply without taking on extra full time staff.

Industry association Crowdsourcing.org reports that the number of crowdsourcing employees grew by more 100 percent each year from 2009 to 2011, reaching 6.3 million last year. Revenue last year grew 75 percent as a result, with the industry taking in $376 million.

It’s no surprise that investors are eager to invest in the clearly hot sector. The latest recipient of capital is CrowdSource (previously Scalable Workforce, and no affiliation to crowdsourcing.org), which is announcing $12.5 million in series A funding led by Highland Capital Partners. Highland’s Corey Mulloy has joined the company’s Board of Directors.

CrowdSource delivers on-demand skilled labor to businesses that can't afford full-time workers, via an integration with the Amazon Mechanical Turk crowdsourcing marketplace. On the recruitment end, the company operates portals like Write.com and others to attract qualified applicants in fields such as copywriting, marketing, Web design, and community moderation.

The company has more than 500,000 workers enrolled, 90 percent of which live in the US and 65 percent of which have bachelor’s degrees or higher. Client businesses can enlist their service via a full or self service structure, with tasks typically priced on a per word or per item basis and ranging from $0.02 to $0.15 per micro-action. The company has reportedly completed 25 million tasks in the two plus years since its launch.

CrowdSource competes directly with five-year-old CrowdFlower, which currently has more than three times as many workers and has raised its own $13.2 million. That two businesses of this size exist and have been able to raise this level of capitalization speak to the size of the crowdsourcing opportunity. Whether there’s room in the market for both to grow at the rate this level of outside financing demands is less clear.

Rather than returning to pre-recession staff sizes, many companies are looking for creative ways to operate leaner and with more flexibility. CrowdSource plays directly into this trend by offering on-demand skilled labor. The company was already among the largest and best known in the space. Now that it’s well capitalized, it needs to step on the accelerator.

The one thing missing from this funding story is a crowdfunding element to its latest round.